To Which Type of Transaction Does the Negative Option Rule

question 2

Multiple Choice

To which type of transaction does the negative option rule apply?

• A)Subscription to CD or DVD clubs that sends products on a regular basis and require the consumer to opt out of the next shipment
• B)Buying used cars
• C)Subscription to telephone services
• D)Buying goods via telephone or Internet

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Definitions:

Company Tax Rate

The percentage of profits a company is required to pay to the government as tax.

Business Combination Valuation Entries

Journal entries that record the valuation of assets, liabilities, and contingent liabilities at fair value in a business combination.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the consumption of the asset's economic value.

Goodwill

An intangible asset that arises when a company acquires another company for a price higher than the fair value of its net assets, representing the value of the brand, customer relationships, and other intangible aspects.